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Thursday, December 22, 2011

The National Football League – monster TV

NFL games are 23 of the 25 most-watched programs among all television shows this fall and draw more than twice as many average viewers as primetime broadcast shows. The economic engine that drives the National Football League –their broadcast agreements.

The National Football League has their television broadcast agreements in place through the 2024 NFL season. Fox’s average rights fee will jump to about $1.1 billion a year from $725 million in 2013. CBS’s payments will increase to nearly $1 billion from $625 million, and NBC’s fees will go to $950 million from $612 million. ESPN’s recent agreement can be added to that. Three months ago it approved a 73 percent increase to $1.9 billion annually for eight years.

The NFL will generate more than $4 billion annually in broadcast revenues, an average of more than $134 million for each of the NFL’s 32 member franchises.

“In these difficult economic times, you want to create stability and planning for our business,” said Robert K. Kraft, the owner of the New England Patriots and chairman of the league’s broadcast committee in a New York Times report.

“When we made our C.B.A. deal with the players,” he said about the collective bargaining agreement reached last summer, “we promised if they worked with us, they would be the big beneficiary — and they’re getting 55 percent of the TV money.”

The NFL and the NFL Players Association reached an agreement for a new ten-year collective bargaining agreement that will last through the 2020 season in August.

“These agreements underscore the NFL’s unique commitment to broadcast television that no other sport has,” NFL Commissioner Roger Goodell said. “The agreements would not have been possible without our new 10-year labor agreement and the players deserve great credit. Long-term labor peace is allowing the NFL to continue to grow and the biggest beneficiaries are the players and fans.

“CBS, FOX and NBC have served NFL fans with the highest-quality television production,” Commissioner Goodell said. “The networks will continue their outstanding coverage of the NFL while also helping to deliver more football to more fans using the best and most current technology.”

The NFL and NBC, who hold the broadcast rights for Super Bowl XLVI, announced this year’s Super Bowl will be streamed online at NBC.com for the first time.

“We are pleased to work with our partners NBC and Verizon to bring our fans more ways to watch their favorite sport during their favorite time of the year,” said Hans Schroeder, NFL Senior Vice President of Media Strategy and Development.

Which begs the question, in the toughest economic period since the Great Depression, why and how could network executives justify paying billions of dollars to televise NFL games?

Mark Lazarus, a former Turner executive who is now the chairman of the NBC Sports Group, told The New York Times: “In an early discussion, they said that this would have had a different value at a cable network, whether that’s Turner or whoever. They’ve seen what ESPN does with the N.F.L. on cable.”

Lazarus is the force behind the rebranding of Versus to the NBC Sports Network on January 2. Count on Lazarus to be even more aggressive with the NFL. Their new NFL agreement includes the rights for the Thanksgiving night game.

When the NFL makes additional Thursday night games available, NBC and the NBC Sports Network will bid very aggressively. Lazarus is well aware how important the NFL is to ESPN.

Lazarus will add a Sunday morning NFL show that reportedly will go head-to-head with ESPN’s Sunday three-hour NFL show, the NFL Network’s four-hour Sunday morning show and CBS and Fox’s one-hour broadcasts.

President and CEO of CBS Corp. Leslie Moonves added: "No other franchise delivers ratings the way an NFL game does. The League has proven time and again that it understands the importance of a healthy broadcast partner, and this historic new agreement strengthens that partnership. In addition, the deal continues CBS' ability to be profitable with the NFL throughout the coming decade and beyond."

David Hill, chairman of the Fox Sports Media Group, told The New York Times that the company was paying a lot more for largely the same package of rights it now has.

“It’s a strong increase, but you’re not talking about normal things,” Hill said. “The N.F.L. transcends everything, as it has soared to astronomical heights.”

"The National Football League is the greatest television property in the world and we are thrilled that it remains the cornerstone of Fox Sports and the Fox Network well into the next decade," Hill added

It would seem that it’s next to impossible for networks to turn a profit on their NFL programming. They lose money for the most part with the exception of the year(s) they broadcast the Super Bowl. The NFL is about much more than the advertising revenue that is part of each game.

NBC will use this year’s Super Bowl to showcase programming NBC offers during their primetime schedule. Fox, CBS and NBC use a significant percentage of their programming each game to showcase programming.

The NFL broadcast agreement ensures NFL teams in each teams’ home market will be able to see their team’s games on a terrestrial network. The NFL is the only sports league that can make that bold a statement. Monday Night Football games on ESPN are televised on an over-the-air station, as long as the home team meets the blackout rule for that game.

The NBA airs both of their conference finals are on cable. Major League Baseball airs one of the league championship series on Fox and the other on TBS. The NHL airs most of their playoffs on Versus, including at least two Stanley Cup Final games.

NBC Universal’s Chief Executive Steve Burke told the New York Times he was ready to pay more for NFL rights, but in order to sell it to his shareholders it had make good business sense. Getting the rights to the Thanksgiving Night game was a key,

“When everybody has finished their turkey and is ready to watch football, you are likely to generate significantly higher viewers than a Sunday night. Combine that with the fact that it’s the night before Black Friday and if you’re an advertiser, you have to be in the game.”

“Think of ways to add value to the existing package. So we did it until we got to a place where we were basically at break-even.” Burke concluded.

NFL players, as Kraft pointed, out receive 55% of television revenues.

The NFL TV deals are all about making money for everyone. It’s a money making machine for the players, the leagues and the network.

About Me

The evolution of Howard Bloom’s career took a dramatic change in the spring of 1997, when Howard began publishing SportsBusinessNews.com. In its fifteen years, SBN has evolved into the largest and one of the most influential sports industry publications.